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Impact of Leverage on Profitability: A Study of Sabar Dairy
Authors: Dr. J. B. Patel
Number of views: 478
The purpose of this paper is to study and understand the impact of leverage on the profitability of Sabar Dairy. The
present study examines the relationship between return on capital employed (ROCE), return on equity (ROE), return on
assets(ROE) and earnings per share(EPS) with operating leverage, financial leverage and total leverage. A data of Sabar
Dairy is examined for the period 1985-86 to 2013-14. The empirical findings the result of regression indicates that the
coefficient of DOL, DFL and DTL is positive with ROCE but not significant. However, the overall model is statistically
significant; the coefficient of DOL, DFL and DTL is positive with ROE but not significant. However, the overall model is
statistically significant, the coefficient of DOL and ROA is significant positive, coefficient of DFL and ROA is negative and
coefficient of DTL and ROA is positive but not significant. However, the overall model is statistically significant and the
coefficient of DOL, DFL and DTL is positive with EPS but not significant. However, the overall model is statistically
significant. The result is concluded that Sabar Dairy has use the operating leverage, financial leverage and total leverage
satisfactorily.